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Banking Essentials - Part I

This pathway will walk us through the basics of banks, starting with some of the different types and their main functions, then starting to look at the regulation faced by the banks, both before and after the Global Financial Crisis.

Greenwashing

Greenwashing is the act of distributing false information about something being more environmentally friendly than it actually is.

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Tackling the Cost of Living Crisis

In this video, Max discusses the cost-of-living crisis currently enveloping the UK. He examines its impact on households as well as the overall economy.

CSR and Sustainability in Financial Services

In the first video of this two-part video series, Elisa introduces us to sustainability. She begins by looking at the difference between sustainability and corporate social responsibility, two terms that can be easily confused.

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Featured Pathways

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Banking Essentials - Part I

This pathway will walk us through the basics of banks, starting with some of the different types and their main functions, then starting to look at the regulation faced by the banks, both before and after the Global Financial Crisis.

Greenwashing

Greenwashing is the act of distributing false information about something being more environmentally friendly than it actually is.

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Ready to get started?

Plans & Membership

Our Platform

Expert led content

+1,000 expert presented, on-demand video modules

Learning analytics

Keep track of learning progress with our comprehensive data

Interactive learning

Engage with our video hotspots and knowledge check-ins

Testing & certification

Gain CPD / CPE credits and professional certification

Managed learning

Build, scale and manage your organisation’s learning

Integrations

Connect Finance Unlocked to your current platform

Featured Content

More featured content

Tackling the Cost of Living Crisis

In this video, Max discusses the cost-of-living crisis currently enveloping the UK. He examines its impact on households as well as the overall economy.

CSR and Sustainability in Financial Services

In the first video of this two-part video series, Elisa introduces us to sustainability. She begins by looking at the difference between sustainability and corporate social responsibility, two terms that can be easily confused.

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The Corporate Sustainability Reporting Directive (CSRD)

The Corporate Sustainability Reporting Directive (CSRD)

Keith Mullin

35 years: Capital markets editorial

In this video, Keith discusses the Corporate Sustainability Reporting Directive (CSRD) and its impact on transparency in ESG disclosures. He explores the purpose of the CSRD, its differences from other directives like SFDR and NFRD, and the significance of the Sustainability Reporting Standards (SRS). Join us to understand how the CSRD promotes transparency, sustainability, and provides valuable insights for investors and stakeholders.

In this video, Keith discusses the Corporate Sustainability Reporting Directive (CSRD) and its impact on transparency in ESG disclosures. He explores the purpose of the CSRD, its differences from other directives like SFDR and NFRD, and the significance of the Sustainability Reporting Standards (SRS). Join us to understand how the CSRD promotes transparency, sustainability, and provides valuable insights for investors and stakeholders.

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The Corporate Sustainability Reporting Directive (CSRD)

14 mins 14 secs

Overview

The Corporate Sustainability Reporting Directive (CSRD), an integral part of the EU's sustainability agenda, significantly enhances transparency in environmental, social, and governance (ESG) disclosures. Replacing the Non-Financial Reporting Directive, the CSRD imposes stricter reporting requirements on approximately 50,000 entities, which encompass large, listed companies and those non-EU firms with substantial EU operations. It adopts the double materiality principle, necessitating companies to disclose both their impacts on sustainability and the effects of sustainability on their businesses. Initiated in 2022, the CSRD introduced the European Sustainability Reporting Standards (ESRS) to assure accurate, comprehensible, and comparable sustainability reporting, with full adoption expected by June 2023. Ultimately, this directive promotes corporate transparency, fosters sustainability, and provides valuable ESG insights for investors and other stakeholders.

Key learning objectives:

  • Outline the purpose of the CSRD and what it is aiming to achieve

  • Understand the differences between the CSRD and other directives such as the SFDR and NFRD

  • Outline the purpose of the European Sustainability Reporting Standards (ESRS)

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Summary

What is the purpose of the CSRD and what is it aiming to achieve?

The CSRD is an EU law with the purpose of enhancing the quality and breadth of corporate ESG disclosures. The directive aims to direct capital flows towards sustainable investments and eliminate greenwashing, which is the practice of making an unsubstantiated or misleading claim about the environmental benefits of a product, service, technology, or company practice. 

Through this directive, the EU hopes to upgrade corporate transparency, providing stakeholders with more reliable and comparable information about a company's ESG intentions and performance. 

This is a part of the EU's broader initiatives under its Action Plan on Financing Sustainable Growth and the EU Green Deal, aiming to transform the EU into a modern, resource-efficient, and competitive economy with no net emissions of greenhouse gases by 2050. The CSRD is designed to support these broader goals by ensuring that corporations are transparent about their sustainability practices and impacts.

How does the CSRD differ from the SFDR?

The CSRD and SFDR, both EU regulations, differ in scope, focus, reporting requirements, and purpose. The CSRD applies to a broader range of large companies and industries, focusing on non-financial sustainability disclosures. It introduces detailed and standardised reporting requirements, aiming to increase corporate transparency about ESG performance. 

Conversely, the SFDR applies solely to financial market participants and advisors, focusing on the integration of sustainability risks in investment decisions. It requires entities to disclose how their policies and investment decisions impact sustainability, aiming to provide clear information about investment products' sustainability risks and impacts.

How does the CSRD differ from the NFRD?

The CSRD replaces the NFRD, significantly expanding its scope and reporting requirements. While the NFRD applied to large public-interest entities with over 500 employees, the CSRD applies to a wider range of large companies and those with securities on regulated EU markets. 

The CSRD introduces more detailed and standardized reporting, requiring companies to adhere to mandatory sustainability reporting standards. Unlike the NFRD, the CSRD mandates external assurance of non-financial information by an independent provider. Overall, the CSRD addresses the limitations of the NFRD, enhancing detail, standardisation, and scope of non-financial reporting​​.

Why was the CSRD created and what was the process?

The CSRD was initiated due to dissatisfaction with unclear and ineffective legislation around non-financial disclosure by large companies. Its creation aimed to increase transparency and performance in environmental, social, and employee-related matters. The process began with the adoption of environmental and social disclosure guidelines in 2017, then climate-related information disclosure in 2019. The significant breakthrough occurred with the final report from the European Financial Reporting Advisory Group (EFRAG) in 2021. The CSRD proposal was agreed upon in 2022, and the first drafts of 12 Sustainability Reporting Standards were delivered by EFRAG later that year. The final standards are set to be finalised and adopted in June 2023.

What is the purpose of the European Sustainability Reporting Standards (ESRS)?

The European Sustainability Reporting Standards (ESRS) are a critical component of the CSRD. They will aim to standardise how companies disclose their environmental, social, and governance (ESG) impacts.

In November 2022 the first set of 12 draft ESRS were delivered to the Commission. These include 2 general ESRS, 5 environmental ESRS, 4 social ESRS, and 1 on governance. The Commission will finalise the ESRS on the 30th June 2023.

The ESRS will aim to ensure that reported information is of high quality, comprehensible, verifiable, comparable, and faithfully represented. They also introduce the ‘double materiality’ principle, requiring companies to disclose both their impacts on sustainability and the effects of sustainability on them. The ultimate objective is to increase transparency, and accountability, and foster more sustainable corporate behaviour.

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Keith Mullin

Keith Mullin

Keith is the founder and director of KM Capital Markets, a media and thought-leadership consultancy. He spent the past 35 years working in specialist capital markets media and has had a ring-side seat at all of the major market events. Prior to setting up KM Capital Markets in 2017, Keith worked at Thomson Reuters.

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